Human capital is a potential blind spot for firms failing to invest in their workforce in the wake of the COVID pandemic, Lloyd’s says, and insurance product designers should innovate to capture valuable new risk protection opportunities as work practices evolve.

A new report from Lloyd’s and KPMG says the collective abilities and skills of employees is a key driver of organisational value.

It identifies ways in which the insurance industry can help businesses manage and mitigate against the far-reaching implications of human capital events, such as a pandemic.

Head of Innovation at Lloyd’s Trevor Maynard says human capital is key to company value and the past two years highlighted the need for insurers to work with risk owners.

“We hope to see new innovative solutions and products that will help protect companies’ human capital,” Dr Maynard said.

The joint report is the last in a series focused on the increasing risk that intangible assets pose to organisations and the importance of protecting them. The findings highlight the need for further insurance solution product development in this area.

“By protecting the value associated with teams rather than just key individuals, human capital insurance solutions could be key to workforce management in the wake of the pandemic and future systemic risks,” Lloyd’s said.

Lloyd’s said it is “becoming increasingly apparent” that talent attraction and retention, and employee wellbeing have a direct impact on business performance and insurers can play a preventative role and track and analyse workforce data to project risk triggers and their potential impact on value.

By investing in employees through upskilling, better engagement and proactive culture management, firms can ensure they are attracting and retaining the best talent, the report said.

“Though most firms recognise this, many are failing to fully understand the value of their people. This means that their skills and knowledge – and corresponding value as human capital – depart when employees do, leaving firms exposed,” it said.